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Housing Demand in Islamabad Capital Territory

Housing Demand in Islamabad Capital Territory

By: Ayaz Ahmed

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Objective and Plan of PresentationObjective and Plan of Presentation

The objective of this paper is to study the housing demand in Islamabad.Plan:- Introduction.- Housing Sector in Pakistan.- An Overview of Islamabad.- Analysis of Housing Sector in Islamabad.- Policy Recommendations.

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INTRODUCTIONKey Factors Affecting City’s

Housing Attractiveness

INTRODUCTIONKey Factors Affecting City’s

Housing Attractiveness

Absolute Population.Availability of Job Opportunities.Infrastructure of the City.Education and Health Facilities.Average Level of Housing Costs.

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Polices Affecting the Housing SectorPolices Affecting the Housing Sector

Provision of Infrastructure.Regulation of Land and Housing Development.Organization of the Construction and Materials Industry .Involvement of Public Sector.Role of Informal Housing Units.

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Brief Literature ReviewBrief Literature ReviewSmith, Rosen and Fallis (1988)Housing differs from the standard Neoclassical good; it is heterogeneous and its spatial fixity means that the location of the housing stock matters to households.

Maclean (1994)Housing is imperfectly substitutable across locations.

Zaki (1981)Over viewing the housing condition in Pakistan for the 1960-1980 period. Housing conditions have been very congested and low in quality.

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Brief Literature ReviewBrief Literature Review

Pasha and Ghaus (1990)They analyzed trends in housing conditions in Pakistan over the same period 1960-1980. The study shows that housing conditions improved significantly over time.

Nazli and Malik (2003)They highlighted the importance of housing as an important dimension of poverty reduction. They focused on housing as a poverty alleviation strategy element to open up opportunity, security and empowerment.

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Table 1Housing Sector in Pakistan

Table 1Housing Sector in Pakistan

Present Housing Stock 19.3 MillionUrban 32.3%Rural 67.7%Pacca 21.0% Semi-Pacca 40.0%Kutcha 39.0%

Household size 6.6 Persons per houseOccupancy 3.3 Persons per roomHousing Shortfall 4.3 MillionAnnual Requirement 570,000Annual Production 300,000Recurring Annual Shortfall 270,000

Source: National Housing Authority, Ministry of Housing & Works Source: National Housing Authority, Ministry of Housing & Works

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Housing Finance in PakistanHousing Finance in PakistanArshad (2003)HBFC did not have a very encouraging record for Housing Finance. It is because almost 77% of HBFC’s housing loans have gone to influential people in the upper or upper-middle income groups, and only 23% have gone to the lower and lower-middle income groups.

State Bank of PakistanPromoting the Concept of Housing Finance.Encouraging the commercial banks by re-financing them at concessional rates.SBP has relaxed the debt-equity permissible ratio up to 80:20. while enhancing the maximum borrowing limit to Rs. 7.5 Million.

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National Housing PolicyNational Housing PolicyThe Policy Addresses all the core issues relating to:- Land matters.- Housing finance.- Construction.- Services sector.- Low cost & Rural housing. - Building material and infrastructuredevelopment.

- Building and zoning regulation.- Institutional framework.

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Islamabad City OverviewIslamabad City OverviewBrief History of Islamabad

- Islamabad, literally meaning “The Abode Of Islam”.

- In 1959, President General Muhammad Ayub Khan created a commision to study the feasibility of a new capital.

- In June 1959, it was decided that the capital should be built to the North of Rawalpindi.

- In October 1961 that the construction work commenced .

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Area of IslamabadArea of IslamabadAreaMunicipal Area 440.3 Sq.kmRural Area 465.7 Sq.kmTotal Area 906.0 Sq.km

Source: CDA, Islamabad.

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Demographic CharacteristicsDemographic Characteristics

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Table 3Housing Sector in Islamabad

Table 3Housing Sector in Islamabad

Islamabad City’s Housing ProfileExisting Housing units in Sectors 75,000 unitsRequired Housing Demand 125,000 unitsExisting ‘Shortage’ 50,000 unitsAdditional Demand per year 4,000 units

Source: CDA, Islamabad.

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Level of CongestionLevel of Congestion

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Nature of TenureNature of Tenure

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Sectoral Allocation of Housing UnitsSectoral Allocation of Housing UnitsResidential Not more than 55%

(b) Open/Green Spaces/Parks Not more than 8%

(c) Roads/Streets Not less than 26%

(d) Grave Yards Not less than 2%

(e) Commercial and Parking Not less than 5%

(f) Public buildings like school, mosque,

Post office, community center and hospital etc. Not less than 4%

17Source: CDA Islamabad

F-6/G-6 and F-7/G-729. Developed Sectors of BlueArea

F-918. City park (on going)

G-5 and F-527. Developed Public BuildingSectors

F-416.Developed Sectors for Administrative Building

G-3 and G-425. Developed Sectors for

Diplomatic Enclave

I-1114. Developed Sectors forWholesale Markets

I-9 and I-1023. Developed Sectors forIndustrial/Residential

H-8, H-9 and H-1132. Developed InstitutionalSectors

F-12, G-12, D-12 and E-123Being Planned

I-14, I-15, I-16 and G-135Planned

G-6, G-7, G-8, G-9, G-10, G-11, F-6, F-7, F-8, F-10, F-11, E-7, E-9 and I-815Developed

Name of SectorsNo. of Sectors1. Residential Sectors

Table 6Developed Urban Sectors

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Table 8Sector Wise Price of Housing Units in Islamabad

(In ‘Million’ rupees)

Table 8Sector Wise Price of Housing Units in Islamabad

(In ‘Million’ rupees)

20.0-40.04 .0-7.54.0-10.05.0-30.05.0-25.05.0-8.07.0-20.07.0-35.08.0-25.0

25.0-100.025.0-120.025.0-120.025.0-125.040.0-150.0

40.00-160.0

311-600125-200125-250125-500125-500125-250133-500166-600167-600325-2000500-2000500-2000500-2000500-2000500-2000

I-8I-9I-10G-6G-7G-8G-9G-10G-11F-6F-7F-8F-10F-11E-7

Price RangeHousing Unit Size(Approximate Sq. Yard)

Sector

Source: Figures based upon a survey conducted locally by the author

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Proposed Housing Scheme for Federal Govt. EmployeesProposed Housing Scheme for Federal Govt. Employees

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Policy RecommendationsPolicy RecommendationsFrom the forgoing discussion the following policy recommendations are made.

The Federal government should expand the area of Capital Territory in order to meet the housing shortfall in Islamabad.

The new technology and innovations for construction of housing units should be introduced in order to make this sector globallycompetitive and financially affordable.

Foreign and domestic investors should be encouraged to invest in infrastructure of housing i.e. roads, bridges, and energy sector in order to facilitate the housing sector.

The Capital Development Authority (CDA) should acquire land on market rate and after development sell it on market rate to avoid unnecessary legislation and delay.

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The CDA should develop the housing sector in the given timeframee.g. 3 to 5 years; otherwise these would be developed by privatedevelopers.

The CDA should fix the time limit for the construction of houses in new housing schemes to discourage fake investors and promote genuine buyers, who usually cause the artificial hikes in plots prices.

In the housing and construction industry, around 40-50 big and small allied industries are directly associated and connected e.g. Cement, bricks, steel, wood, glass, paint and plastic etc. Promoting housing sector shall result not only revival of these industries and economy as well but also create the more skill and unskilled employment opportunities which would reduced poverty.

It must be ensured that new housing sectors should be far away from industrial estates in order to avoid environmental problem.

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Thank YouThank You